Animated procedural stylized water ripple in Cycles material
Distorting The Circle

I did some more experimenting and I got like a 50% success in distorting the circle.

I added 2 cross product nodes and 1 normalize node to screw around with the x y z values before plugging it into the multiply nodes which are now in the 'circles' node group. 

The theory: The 'circle' node group draws an infinite amount of n unit lines from the origin of the cube, creating a sphere with a radius of n units. Where the sphere intersects the fluid, a circle of diffuse material appears on the fluid.

To achieve the distortion, a relative IRL suggests that I randomize the radius of the sphere by jumbling up the x y z location data of the cube. It should be able to mess up the radius enough to make a wavy looking circle. I used cross product because it was the one that came close to the desired result.

I wish I could explain this better, but then again, I'm no math wiz.



It looks close but when I render out the animation...



I got electricity instead. Coooooooooool but still not what my project team needs.

Aside from how it looks like electricity, it still doesn't hug around the cube as much as it should and there's very limited controls on how much it spreads out.

Trying Out Dynamic Paint

I never considered trying out the vertex format but as suggested, I looked deeper into what it does and it works like a charm for problem #2. The setup is shown below.



The node setup doesn't look like a nightmare anymore. Thanks, Duarte!

This is still an incomplete answer. I might update this answer as I find out more stuff. Feel free to add on top of this or come up with a better solution altogether.

What's Next: How to make the distortion behave properly (or find something else that behaves properly) and hopefully, apply that on top of the dynamic paint.

.blend file with the electric ripple thing:



.blend file with dynamic paint: